Deutsche Post DHL’s fourth-quarter revenue expanded 2% year over year on an organic basis (excluding foreign exchange), roughly in line with our forecast. The modest top-line increase reflects impressive volume growth at Express and ongoing healthy expansion of the German parcel delivery business. Softer results in the traditional mail business and sluggish international freight-forwarding conditions only partly offset these factors.

Express posted 7% organic revenue growth, supported by a solid 11% increase in core time-definite international shipments. Volume gains came in above third-quarter trends (9%), suggesting that the firm is still taking market share. We suspect yields (revenue per kilo) were still under pressure due to competitive pricing conditions. Revenue in the global forwarding business increased only slightly (less than 1%), as anemic airfreight demand (tonnage declined 3%) tempered favorable foreign exchange and a 3% rise in ocean freight activity.

Supply-chain revenue increased 2% organically, partly because the segment has seen solid new account wins during the past year (particularly in lifesciences end markets), including EUR 1.2 billion (annualized) in the fourth quarter. Mail revenue was about flat with fourth-quarter 2011, as weakness in traditional letter volumes offset solid growth in the parcel business. Parcel volumes remained strong, expanding 7% (similar to thirdquarter trends). Traditional mail volume contracted 4%.